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Apple drops revenue guidance after slowing sales in China

Global technology giant Apple Inc. has dropped its first quarter guidance after weaker than expected sales in China.

While expected revenue for the period initially sat between $128 and $134 billion (US$89 and US$93 billion), the business now expects that figure to fall closer to $121 billion (US$84 billion), though notes it will be a number of weeks before the figures are finalised.

“While we anticipated some challenges in key emerging markets, we did not foresee the magnitude of the economic deceleration, particularly in Greater China,” Apple chief executive Tim Cook wrote in a letter to investors.

“In fact, most of our revenue shortfall to our guidance, and over 100 per cent of our year-over-year worldwide revenue decline, occurred in Greater China across iPhone, Mac and iPad.”

Cook goes on to add that the rising tension between the United States and China played a part in the declining sales, with traffic to Apple stores in the region declining as the quarter progressed.

This, in turn, led to lower than expected iPhone revenue in the region, which was compounded by the stalling iPhone upgrades seen in other markets.

“We believe there are other factors broadly impacting out iPhone performance, including consumers adapting to a world with fewer carrier subsidies, US dollar strength-related price increases, and some consumers taking advantage of significantly reduced pricing for iPhone battery replacements,” Cook explained.

In response to these trends, the business is seeking to make it easier to trade in used iPhones at Apple stores, as well as allow payments to be made over a longer period.

“This is not only great for the environment, it is great for the customer, as their existing phone acts as a subsidy for their new phone,” Cook said.

Despite the slowing traffic, Apple’s other categories grew over the period, with the company’s wearables category growing by almost 50 per cent due to the popularity of Apple Watch and AirPods.